Credit Suisse clients pulled a record amount of funds in the fourth quarter amid deteriorating confidence in the Swiss lender, as a fifth-straight quarterly loss capped its worst year since the financial crisis.
The worse-than-expected net loss of 1.39 billion Swiss francs (€1.4 billion) in the three months through December was driven by losses at both the key wealth division and the investment bank, Credit Suisse said Thursday. Following a surge in client asset withdrawals in early October, outflows for the quarter totalled 110.5 billion francs. The bank said it expects a “substantial” pretax loss this year.
Following a strategy revamp in October, Credit Suisse is carving out parts of its investment bank and refocusing on its core wealth-management business, after years of scandals and losses shattered confidence in the brand. Executives pulled off a $4 billion capital raise late last year, and are shedding as many as 9,000 jobs with the aim of regaining profitability by 2024. The company has also appointed ex-Bank of Ireland CEO Francesca McDonagh as chief operating officer.
In a November profit warning, executives had disclosed clients had pulled 84 billion Swiss francs of their money in the first two weeks of October amid concerns about the bank’s stability and ability to restructure. Credit Suisse said approximately two thirds of the outflows were concentrated in that period.
“We have taken comprehensive measures to further increase our client engagement and regain deposits as well as assets under management, the bank said.
The continued losses underscore the urgency for chairman Axel Lehmann and chief executive Ulrich Koerner to put Credit Suisse on sustainable footing again. On Thursday, the lender announced the purchase of M Klein & Co operations for $175 million, as part of the establishment of the new Credit Suisse First Boston brand to house investment banking functions.
The bank has already received a commitment for a $500 million injection in the business and is engaging with other interested parties to provide balance sheet or equity for the carve out. – Bloomberg
